The jobless rate in San Diego County jumped to 8.6 percent in January – matching its highest level in at least two decades – as retail clerks, restaurant waiters and temporary workers hit the unemployment lines, according to data released yesterday by the state.

Economists say they would not be surprised to see the local unemployment rate top 10 percent before the job market stabilizes – which, they say, will probably not occur until the first half of next year.

“It could easily hit 10 percent,” said Alan Gin, economist at the University of San Diego. “This is becoming a self-feeding cycle. People are losing jobs and not spending money, which causes more jobs to be lost.”

Kelly Cunningham, economist at the National University System's Institute for Policy Research in San Diego, said he had anticipated that the jobless numbers would not be good, “but this is really worse than what we were predicting. I didn't expect the unemployment number would get this high until summer.”

From December to January, the county lost 28,300 payroll jobs, according to the California Employment Development Department. A large percentage of job losses came from seasonal layoffs, as retailers cut their work force after the holiday shopping season. But the cuts hit every major industry in January, including such stalwarts as health care, private education and government.

Since January 2008, the county has lost 28,000 payroll jobs, a 2.2 percent drop in employment. The hardest-hit industries have been construction, which has shed 10,000 jobs; retail, which lost 9,100; and manufacturing, which dropped 4,100.

“You expect construction to be down, given that we only had 88 housing starts in January,” Gin said. Housing starts are now at their lowest level on record. “But it was surprising to see such a large drop in manufacturing, even though it has been slowly bleeding jobs over the past eight or nine years. And in retail, it's striking how the numbers have spread through department stores and clothing stores.”

Nearly every segment of retailing lost workers last year, led by a loss of 2,300 workers at department stores and 2,200 at auto dealerships.

“Part of the decline at department stores comes from the closure of stores like Mervyn's,” Gin said. “But a lot of it just reflects a consumer cutback in spending.”

The only retail outlets to grow during the year were health and personal care stores, which added 100 workers.

Because of seasonal layoffs at retailers, the unemployment rate typically spikes in January. But this January's 8.6 percent rate reflects a sharp jump from the previous January's rate of 5.1 percent.

That puts the county's rate about even with the unadjusted national average of 8.6 percent. (The seasonally adjusted national rate last month was 7.6 percent.)

By comparison, California's unadjusted rate was 10.6 percent, or 10.1 percent after seasonal adjustments. The state does not provide seasonal adjustments for counties other than Los Angeles.

The last time San Diego County's jobless rate reached this high was July 1993, and comparable data only go back to 1990.

Still, San Diego outperformed most other counties in the state. Forty out of California's 58 counties now have unemployment rates in the double digits. Most of those are sparsely populated areas in the Central Valley and Sierra Nevada, but they also include such nearby counties as Los Angeles, Riverside, San Bernardino and Imperial.

The slowdown in hiring was also noticeable at temporary employment agencies, which lost 800 contract employees in January and 3,200 over the past year.

“Companies are petrified about where this economy's going,” said Phil Blair, a co-owner of the regional operations of the Manpower employment agency. “Instead of bottoming out, things are getting worse rather than better. I don't expect the numbers from February or March to be any better than January.”

Blair said the situation is not totally bleak. He said his firm is doing slightly better than it was last year. He's trying to fill openings for 150 clean-room technicians in Temecula, 20 medical building clerks in San Diego and 40 customer service and online marketing workers for a local high-tech firm.

But Blair said most of his competitors are in worse shape. He estimated that the typical job placement firm is down by 20 percent to 40 percent from last year.

Susan Afan, the San Diego regional director at the Robert Half job placement firm, said companies that are hiring are sitting on a glut of qualified workers.

“They know that there are plenty of good people available, and they're taking their time to find the best ones they can,” she said.

Afan said the best prospects for employment are health care, private education, green technologies and “things we can't do without,” such as utilities and waste management.

But even those areas had a rough January. Health care operations shed 1,200 jobs during the month, and private education services were down 200.

The weakness of the job market is being reflected in consumer confidence surveys. One such survey released yesterday by The San Diego Union-Tribune showed the most pessimism since the newspaper began polling in 1996. Consumer confidence dropped 9.3 percent from January to February. Since February 2007, it has dropped by more than 66 percent, from 106.8 points to 34.9 points last month.

Local unemployment has mostly been rising for more than a year, following the bursting of a real estate bubble that led to massive layoffs in construction, real estate and finance, which in turn contributed to a decline in consumer and business spending.

Economists say one of the few encouraging signs in the January jobless data is that employment in the beleaguered real estate market seems to be hitting bottom.

In January, only 100 mortgage workers and 200 real estate workers in San Diego County lost their jobs – a low number for two industries that have been at the center of the crisis.

“In both real estate and mortgages, we're basically flat compared to where we were a year ago, which might be due to a recent pickup in sales,” Gin said.

Bargain hunters have began returning to the market, taking advantage of the large number of foreclosure homes.

Blair said employment may soon pick up for mortgage workers, thanks to a rise in loan renegotiations and refinancings. At Manpower, he is working with a client who is exploring hiring as many as 120 mortgage reprocessors.

Gary London, who heads London Group Realty Advisors, said the federal stimulus program could help stabilize local employment numbers, although he does not expect a rapid boost in employment.

Based on data from the San Diego Association of Governments, London estimated that if San Diego gets a proportional amount of the stimulus package, it could create as many as 96,000 jobs in the region.

About 60,000 of them, he said, would be relatively short-lived positions in infrastructure construction, “but that would leave 36,000 jobs, which would make up for all the job losses we've had in the last year and a half.”

But he said that would merely stabilize the market instead of leading to an upswing.

“The stimulus package is only part of the solution,” he said. “People have to feel stimulated from the stimulus to get the economy moving.”